The Truth About Our Payroll Tax Cut

Photo Illustration by DonkeyHotey via Flickr/Special to The Politics Blog

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If John Boehner asks really nicely, will the members of his caucus give him his balls back for Christmas?

Speaker Of The House? Try Ventriloquist's Dummy Of The House. While Boehner was on TV yesterday, reneging on the "deal" that was struck to keep the payroll tax-cut in place, I kept wanting another camera on Eric Cantor to see if he were drinking a glass of water while Boehner burbled on.

In merciful brief, the Republicans, having got 89.77 percent of their way in the current budgetary cage-match, deigned to allow the Senate to pass a resolution whereby the payroll tax cut would be extended for the next two months. Whereupon it came back to the House, where Boehner presented it to the majority over which he nominally presides.

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"Fk you and your deal," his majority explained.

Boehner apparently reversed himself since a conference call with caucus members Saturday, when he was the only House Republican leader to express support for the Senate plan, according to a GOP source.

And then he fetched a stick, rolled over, and played dead. Whoozzza good boy, John? Now, sit.

That this is no way to govern a country is plain by now, and is more clearly evinced by the fact that, somehow, expedited approval for the damned Keystone XL pipeline is rolled up in here, but a modest surtax on billionnaires got tossed over the side in the interest of a fantasy of bipartisan compromise. What I would like to know, and I invite comments on this, is whether or not both sides have gone to guns here over the best method of carrying out a pretty bad idea.

I know that a payroll tax cut is alleged to be stimulative, especially for the middle-class. One of the ways I know this is that it partly answers one-third of the blog's basic economic philosophy: Fk The Deficit. People Got No Jobs. People Got No Money. Under the president's plan, people got money, a little more of it, anyway. What I don't truly understand is how this whole argument isn't extremely bad for Social Security in the long run.

In our current political climate, and in the political climate that is likely to prevail for the balance of my lifetime, it's almost impossible to reverse a tax cut already in place because of the same dynamics that make it almost impossible to levy a tax increase on any group of people with sufficient clout to resist it. One of the reasons we're in the mess we're in today is that George W. Bush rammed through tax cuts the benefits of which accrued for the most part to the richest people in the country. He then launched two off-the-books wars and passed a new Medicare entitlement that was paid for largely through the sale of magic beans. And even with all of that, and even with all of official Washington having conniption fits over The Deficit, the government is ripping itself apart trying to rescind only those parts of the Bush tax-cuts that benefited the richest members of society. Nobody who can fight it ever gives back a tax cut. Ever.

Given that, there is no reason to believe that the payroll tax-cut will be any different. Restoring the payroll tax to the level where it was before the payroll tax-cut was passed — 6.2 percent from the current 4.2 percent — means that an average taxpayer will get socked with a 48 percent real tax increase one day that he didn't have the day before. (In fact, this is precisely what the White House is arguing at the moment in connection with the Republican shenanigans in the House.) It's going to take some powerful convincing to make me believe that this tax cut is ever going to go away because I don't think there ever again will be enough politicians with the gumption to tell their constituents that their taxes need to be raised. Better to con them with austerity plans that will convince them that it is their patriotic duty to make their own lives worse. At least, with those, that sweet, sweet corporate money keeps rolling in for the next campaign.

That being the case, it's hard to see how this is good for the long-term stability of Social Security. The bite that the payroll tax-cut is taking out of the system's dedicated revenue stream is supposed to be made up out of general revenues. But that hardly seems politically tenable, either. It seems to throw Social Security firmly into the roiling abyss that is our current argument over federal spending, which can't be good. If you can cut the EPA's funding, and if you can slash asthma relief for urban children, it seems to me that, sooner or later, you can take a whack at the $120 billion or so that are supposed to be transferred to the Social Security trust fund from general revenues. You then present the country with a Social Security "shortfall" and, suddenly, privatization is back on the table again.

I am willing to hear how I'm wrong about this but, every time I hear someone talking about the benefits of a payroll-tax cut, I hear zombie-eyed granny-starver Paul Ryan in the background, giggling.